A Qualtrics IPO is coming to the market. Less than two years after being acquired by SAP (NYSE: SAP), the company is spinning out to go public. And it isn’t the first time Qualtrics stock was heading for the market.
But is Qualtrics a good investment opportunity? Here’s what we know…
Qualtrics IPO: The Business
CEO Ryan Smith founded Qualtrics in 2002 with his father, brother and college roommate. Qualtrics is a software company and created Experience Management (XM™). The software allows organization to address problems and opportunities in the experience economy.
According to The Localist:
“The experience economy is defined as ‘an economy in which many goods or services are sold by emphasizing the effect they can have on people’s lives.’ Experiences are their own category, just like ‘goods’ and ‘services.’”
The Harvard Business Review first coined the term in 1998. In today’s time, people are focusing less on what material things money can buy. Instead, people are more interested in what experiences they can buy. And that’s where Qualtrics’ software comes in.
Experience Management: Know What You’re Investing In
The XM™ Platform is designed to collect feedback data from four key areas Qualtrics identifies. The platform then combines that data to create reports for businesses to understand how they can better operate within these key areas.
The four elements are as followed:
- Customer Experience: Provides an understanding of the customer’s journey, allowing organizations to monitor, measure and take action to reduce customer experience gaps.
- Employee Experience: Provides insight into the employee experience from recruitment and on-boarding to performance management. The goal is to improve employee engagement and increase productivity.
- Brand Experience: Identifies key forces in brand perception, including psychographic data, marketing effectiveness and competitive positioning.
- Product Experience: Analyzes feedback to identify features and experiences that create a unique product of high quality. This allows for more accurate pricing and packaging decisions.
By investing in Qualtrics stock, you invest in a platform used by over 9,000 global customers. And that includes over 75% of the Fortune 100.
But this isn’t the first time a Qualtrics IPO was heading for the market.
SAP Qualtrics IPO: Round Two
In 2018, Qualtrics planned to go public. The company filed on October 19, 2018. It set terms on November 5th and the offering was priced on the 14th. But the filing was withdrawn the next day.
Instead, German software company SAP acquired Qualtrics. Just four days before Qualtrics stock was supposed to hit the market, SAP acquired the company for $8 billion in cash. If the Qualtrics IPO had been successful, its value would’ve been $4.8 billion. So, why would SAP spin out a company it paid almost double for?
In SAP’s press release, CEO Christian Klein said:
“SAP’s acquisition of Qualtrics has been a great success and has outperformed out expectations with 2019 cloud growth in excess of 40%, demonstrating very strong performance in the current setup. As Ryan Smith, Zig Serafin (Qualtrics President) and I worked together, we decided that an IPO would provide the greatest opportunity for Qualtrics to grow the Experience Management category, serve its customers, explore its own acquisition strategy and continue building the best talent. SAP will remain Qualtrics’ largest and most important go-to-market and research and development (R&D) partner while giving Qualtrics greater independence to broaden its base by partnering and building out the entire experience management ecosystem.”
SAP owns 100% of Qualtrics’ shares. And the multinational business plans to retain majority ownership after the Qualtrics IPO.
Qualtrics’ CEO Ryan Smith commented:
“When we launched the Experience Management category, our goal was always to help as many organizations as possible leverage the SM Platform as a system of action. SAP is an incredible partner with unprecedented global reach, and we couldn’t be more excited about continuing the partnership. This will allow us to continue building out the SM ecosystem across a broad array of partners.”
Smith plans to be Qualtrics’ largest individual shareholder. The companies haven’t announced how many shares of Qualtrics stock will be offered. However, SAP’s chief financial officer suggested a range of 10% to 15%.
So, the big question is…
When Will Qualtrics Go Pubic?
There isn’t a set date for the software company’s public debut. In SAP’s press release, the company states the IPO offering and timeline are subject to market conditions. The company has yet to file with the U.S. Securities and Exchange Commision.
It’s no surprise the company is revisiting its shelved IPO plans. Although the stock market is recovering from the coronavirus crash in March, the IPO market has bounced back in recent months. Some of the latest companies looking to IPO include Fisker, Ant Financial and CureVac.
Investors are eagerly awaiting the SAP Qualtrics IPO. And if the markets keep trending up, we could see Qualtrics stock before the end of 2020.